Army settles in $50M software license lawsuit

Dec. 2, 2013 - 11:23AM
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The Army has agreed to pay a Texas software firm $50 million to settle a lawsuit claiming the Army pirated the firm’s troop- and gear-tracking software, installing it on servers and thousands of devices without paying for licenses.

Apptricity Corp., of Irving, Texas, announced the settlement Nov. 25, saying the amount was a fraction of the licenses’ negotiated contract value. Apptricity had originally sought $224.5 million in its lawsuit filed last year in a Washington, D.C., federal court.

The Army released a generic statement today that admitted no fault, but said the service and Apptricity agreed that a settlement was “in best interests of all concerned,” and the two reached a mutually acceptable compromise.

“The government respects vendor intellectual property rights and determined that the settlement, in this particular instance, was the best way to resolve the issues between the parties,” the statement reads.

The Army in 2004 purchased licenses for the software, which is used to track troop and supply movements worldwide, as part of the Transportation Coordinators’ Automated Information for Movements System II, a large multiyear program whose development was canceled in 2006. TC-AIMS II uses radio frequency identification tags and scanners to track equipment for logisticians in real time.

TC-AIMS II was envisioned as a joint program, but neither the Air Force nor Marine Corps would adopt it, and a 2005 General Accounting Office report criticized the Army’s acquisition strategy as too costly. The Army canceled development at the third phase of a planned five-phase rollout, according to the GAO.

As recently as July, Program Executive Office Enterprise Information Systems trumpeted how soldiers were using TC-AIMS II in the drawdown from Afghanistan, planning the movement of equipment from forward operating bases to other destinations, such as unit home stations or depots. Property redistribution teams had requested more TC-AIMS II in retrograde operations, according to a news release from the program office.

The Army has also continued to use Apptricity’s component of TC-AIMS II, according to the company’s copyright infringement claim filed in 2012. The lawsuit claimed that, for several years, the Army installed the software on devices and servers without paying or informing Apptricity.

Apptricity alleged that after it learned the software was still in use in 2009 and sought payment, it wrestled with the Army from December 2009 to June 2011 over the exact number of devices and servers that contained the unlicensed software. It alleges that, based on government data, the Army had not paid for 93 server licenses and 8,913 device licenses.

Yet the Army and Apptricity continued to do business. In August 2011, the Army awarded a $3.2 million noncompetitive, sole-source contract to Apptricity for 12 licenses, acknowledging the software fulfilled the majority of TC-AIMS II’s requirements and that the company is the only authorized supplier of the licenses and technical support services.

Apptricity’s Nov. 25 statement on the settlement sought to look past the previous disagreement. The parties entered into alternative dispute resolution proceedings and cooperatively agreed to settle for $50 million, seeking said the parties sought “to maintain and preserve their strong relationship,” the release said.

“Field commanders were focused on the mission-critical nature of Apptricity software and the need to protect warfighters and facilitate mission objectives,” said CEO Tim Garcia. “Our battle-tested integrated logistics software performed so well that it went viral.”